Correlation Between Tesla and Eaton Vance

Can any of the company-specific risk be diversified away by investing in both Tesla and Eaton Vance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Tesla and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tesla Inc and Eaton Vance Val, you can compare the effects of market volatilities on Tesla and Eaton Vance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Tesla with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Eaton Vance.

Diversification Opportunities for Tesla and Eaton Vance

-0.72

Correlation Coefficient

Tesla  Eaton Vance

Pay attention - limited upside

The 3 months correlation between Tesla and Eaton is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Eaton Vance Val in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Val and Tesla is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Tesla Inc are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Val has no effect on the direction of Tesla i.e., Tesla and Eaton Vance go up and down completely randomly.

Pair Corralation between Tesla and Eaton Vance

Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Eaton Vance. In addition to that, Tesla is 3.66 times more volatile than Eaton Vance Val. It trades about -0.26 of its total potential returns per unit of risk. Eaton Vance Val is currently generating about -0.11 per unit of volatility. If you would invest  1,974  in Eaton Vance Val on January 20, 2024 and sell it today you would lose (36.00) from holding Eaton Vance Val or give up 1.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Tesla Inc  vs.  Eaton Vance Val

Tesla Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Eaton Vance Val

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Val are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Eaton Vance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tesla and Eaton Vance

The main advantage of trading using opposite Tesla and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Eaton Vance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eaton Vance will offset losses from the drop in Eaton Vance's long position.

The idea behind Tesla Inc and Eaton Vance Val pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.